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Bumpy Brexit risk does not justify record low rates - BoE's Saunders

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Bumpy Brexit risk does not justify record low rates - BoE's Saunders

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CARDIFF (Reuters) – The Bank of England should not keep interest rates at their record low of 0.25 percent as an insurance policy against the risk of a “bumpy Brexit” and it needs to start raising borrowing costs now, BoE policymaker Michael Saunders said. Saunders, one of two BoE rate-setters who have voted recently for a rise in Bank Rate, also said there should be no automatic implications for rates if Brexit does not go smoothly, something which could push down the value of the pound. The fall in the value of the pound since the referendum has pushed up British inflation which Saunders, in a speech on Thursday, said was likely to rise to roughly 3 percent in the coming months. “We do not need to be putting the brakes on so much that the economy weakens sharply,” he told an audience in Cardiff, the capital of Wales. “But, our foot no longer needs to be quite so firmly on the accelerator in my view.”

(Reporting by Andy Bruce; Writing by William Schomberg)
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